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Tag: Yue Yuen

  • Yue Yuen predicts $70 million loss for March quarter

    Yue Yuen predicts $70 million loss for March quarter

    Chinese sports-shoe manufacturer and retail conglomerate Yue Yuen Industrial is predicting a loss of up to US$70 million in the March quarter as a result of the Covid-19 crisis – a big turnaround from a $75 million profit in the same quarter a year earlier.

    In a profit warning filed with the Hong Kong Stock Exchange, chairman Lu Chin Chu said the pandemic significantly impacted the operations of various business segments of the company.

    Yue Yuen makes shoes for a raft of brands, including Geox, Levi’s, Rockport, Carters and Pony. Its subsidiary Pou Sheng operates a network of some 5500 directly operated stores and 3000+ sub-distributor stores, predominantly in Mainland China.

    The company was hit on both fronts: shipment delays of shoes led to manufacturing revenue falling by 9.6 percent year on year to US$1.26 billion and the closure of Pou Sheng’s stores across Mainland China meant retail revenues plunged as well. Pou Sheng recorded a net loss of about RMB167 million (US$23.6 million) for the quarter.

    At Yue Yuen, the decrease in revenue was “mostly due to shipment delays amid lower operating efficiency at some of the group’s manufacturing facilities in China and other countries resulting from the Covid-19 pandemic,” Chu said in a stock-exchange filing.

    “The pandemic delayed work resumption at the group’s factories in China after the Lunar New Year; it also adversely impacted its supply chain, resulting in a shortage of certain raw materials. This also led to additional production capacity adjustments in China and other countries.”

    As of this week, however, almost all of the group’s factories in China and more than 98 percent of stores run by Pou Sheng had resumed operations.

    “However, the spread of Covid-19 to US and Europe had severely dampened global consumer demand for athletic footwear, the chain effect of which is negatively affecting both footwear manufacturers and sports retailers,” said Chu.

    “In addition, government lockdowns and other social-distancing measures being imposed in various Southeast Asian countries to contain the Covid-19 pandemic is expected to further hinder the operating efficiency of the group’s manufacturing facilities in this region. This, together with uncertainty about demand, may result in temporary factory closures and further adjustments to the group’s production capacity.”

    Yue Yuen says the figures it has released are based on a preliminary assessment of accounts, with finalized figures for the quarter will be released on May 14.

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  • Yue Yuen to move more production into SE Asia as trade war continues

    Yue Yuen to move more production into SE Asia as trade war continues

    Hong Kong-listed footwear manufacturer Yue Yuen Industries says it expects to move more of its manufacturing from China to other Southeast Asia countries as the US-China trade conflict shows no sign of abating.

    “The US government’s plans to implement a 10-per-cent tariff on US$300 billion of exports from the PRC, which will include footwear, could further accelerate the pace of capacity migration from the PRC to Southeast Asia,” said chairman Chu Chin Lu in the management review of the company’s half-year results.

    Vietnam accounted for 45 percent of Yue Yuen’s shipments in the first half of this year and Indonesia for 38 percent. Mainland China accounts for 13 percent

    “The group will continue to migrate its manufacturing capacity from the PRC to Southeast Asia, while being mindful of the labor supply situation in countries where we operate, especially in Vietnam,” said Lu, who is also worried that continued uncertainty surrounding both the US and China’s future trade policies may impact on consumer sentiment.

    The group’s manufacturing business produced 163.2 million pairs of shoes in the six months to June 30, an increase of 2.7 percent year on year.

    The average selling price per pair was US$16.49, up by 2.2 percent.

    Sales through the company’s listed subsidiary Pou Sheng, increased by 12.3 percent returning 1.968 billion to Yue Yuen. In RMB terms (Pou Sheng’s reporting currency), revenue during the first half of increased by 19.4 percent.

    Yue Yuen reported group revenue to $5.071 billion for the half-year, up by 6.3 percent with profit attributable to shareholders up by 10.5 percent to US$165.9 million. Non-recurring profit was boosted by $19.1 million from the disposal of Texas Clothing Holding Corp.

    Lu said the group faced several headwinds during the half other than the trade war.

    “The group continued to face operational disruptions and challenges resulting from brand customers’ demands for more flexible procurement approaches and changing consumer preferences. This resulted in more volatile monthly sales orders, uneven capacity utilization, and lower production efficiency, alongside the increased complexity and versatility of product portfolios during the period,” he said.

    “To address these challenges and sustain our long-term position, we have continued to ramp-up the implementation of automated production and enhance our operating efficiency through process re-engineering to provide differentiated value-added and one-stop OEM/ODM services to customers with whom we have maintained long-term relationships. We also furthered our efforts to foster environmental sustainability, eyeing at the long-term growth viability of our business.”

    The group’s athletic footwear category outperformed all other categories as a result of the global athleisure trend, accounting for 78.1 percent of footwear manufacturing revenue in the first half of the year. Casual and outdoor shoes accounted for 19.7 percent of footwear manufacturing revenue.

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  • Athleisure trend boosts Yue Yuen sales in 2018

    Athleisure trend boosts Yue Yuen sales in 2018

    Yue Yuen Industrial, the world’s largest manufacturer of athletic, athleisure, casual and outdoor footwear, boosted revenue by 6.3 per cent last year.

    Yue Yuen makes shoes for a raft of brands, including Geox, Levi’s, Rockport, Carters and Pony. Its subsidiary Pou Sheng operates a network of some 5500 directly operated stores and 3000+ sub-distributor stores, predominantly on the mainland.

    For the year to December, the Group recorded revenue of US$9.695 billion, with gross profit up by 4 per cent to $2.446 billion. However, profit attributable to shareholders fell 40.9 per cent to $307.1 million, mainly due to operating deleverage within the manufacturing business, a reduction of the non-recurring gain for the year, and higher finance costs.

    Yue Yuen said revenue attributed to footwear manufacturing (including athletic shoes, casual/outdoor shoes and sports sandals) declined by 1.5 per cent to $5.39 billion, whereas the volume of shoes produced increased by 0.4 per cent to 326 million pairs. The average selling price decreased by 2 per cent to $16.53 per pair, compared with the previous year.

    The group’s athletic footwear category outperformed all other categories as a result of the global athleisure trend, accounting for 79.2 per cent of footwear manufacturing revenue last year. Casual and outdoor shoes accounted for 19.1 per cent of footwear manufacturing revenue.

    The group’s distribution sales are derived primarily from Pou Sheng, involving in retail operations for international sporting goods brands in the Greater China region. Last year, the revenue attributable to Pou Sheng grew by 23.3 per cent to $3.422 billion.

  • Revenue rise puts Yue Yuen on good footing

    Revenue rise puts Yue Yuen on good footing

    Revenue growth of 3.9 per cent saw first-half revenue hit US$4.4 billion for Yue Yuen Industrial (Holdings).

    Profit attributable to the owners of the group grew by 4 per cent year on year to $258.5 million for the six months to the end of June.

    Ye Yuen’s main business categories are making and selling footwear products plus the retail and distribution of sportswear and apparel products, including leasing large-scale commercial spaces to retailers and distributors. It is the largest manufacturer of athletic and casual/outdoor footwear for international brand companies, and runs one of the largest footwear and apparel retail networks. It also provides sport services across Greater China, which continues to be a key growth market for major international sporting and lifestyle brands.

    Its footwear manufacturing revenue recorded a mild decline of 0.7 per cent to $2.9 billion during the first half, with sales volumes dropping 1.6 per cent. However, the group’s manufacturing gross profit grew from $607.9 million to $622.9 million with a gross profit margin of 20.8 per cent.

    Vietnam, Indonesia and China continued to be the group’s main production locations by volume, representing 46, 35 and 17 per cent of total shoe production respectively.

    Athletic shoes accounted for 46.6 per cent of revenue, followed by casual/outdoor shoes at 12.8 per cent. Athletic shoes were also the main manufacturing category, accounting for 77.1 per cent of revenue, followed by casual/outdoor shoes at 21.2 per cent.

    The group’s retail business grew by 15 per cent to $1.4 billion. The group’s main retail subsidiary, Pou Sheng, derives sales primarily from retail omni-channels and a sport services platform covering major cities in Greater China.

    At June 30, the group had 5464 directly run counters/stores and 3036 stores run by sub-distributors in Greater China. It had about about 360,000 employees globally.

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  • Shares of world’s largest footwear maker plunge on false sales data

    Shares of world’s largest footwear maker plunge on false sales data

    Pou Sheng International Ltd, a unit of the world’s largest producer of branded footwear, recorded the largest intraday plunge in its stock price since 2008, after firing its chief financial officer for publishing inaccurate sales figures, and announced the departure of its chief executive.

    Shares of the company tumbled as much as 37 per cent to an intraday low of HK$1.30 in Hong Kong, wiping out HK$4.1 billion of its value. Share prices of Yue Yuen Industrial Holdings, the 62 per cent shareholder of Pou Sheng, fell as much as 9.8 per cent.

    “The Company discovered on 6 January 2017 certain incorrect sales records in the month of December 2016, which could potentially lead to recognition of revenue for sales transactions that did not take place before end of year 2016,” Pou Sheng said in its filing to the Hong Kong stock exchange.

    “The incident revealed weakness over the financial controls,”the Hong Kong-based company said, even though the relevant figures were not significant compared with the group’s overall revenue and did not materially affect any financial information published prior to the announcement.

    The retailer said it has sacked CFO Chen Luo-leng, while CEO Kwan Heh-Der has resigned.

    Pou Sheng is a spin off of Taiwan’s apparel and footwear maker Yue Yuen, which owns factories in mainland China, Vietnam and Indonesia, producing 300 million pairs of shoes every year for Nike, Adidas, Reebok, New Balance, Puma and Timberland.

    Deloitte has been hired by the Hong Kong-based retailer to carry out a check on accounting records of the company, Pou Sheng said.

    Pou Sheng has been in a tight financial spot for the past few quarters, as same store sales growth — a crucial gauge on a retailer’ s business well-being — slowed to 4.6 per cent for the first three quarters of the year from 6.7 per cent for the first half, spurring investor concerns over its long-term prospects.

    The incident has triggered a series of downgrades by research houses on Pousheng and Yue Yuen’s shares.

    “We are worried that a slowdown in Yue Yuen’s retail arm will only be more severe than what the market had feared, and the resignation of the CEO could lead to near term disruption of the company, indirectly affecting Yue Yuen’s financial performance,”a UBS report issued Monday said.

    Credit Suisse cut Yue Yuen’s rating to Underperform from Neutral, as it reckoned its earnings will be weighed down by a projected decline in Pou Sheng’s net profits, according to a Monday note. “This should significantly affect operations and financials of Pou Sheng in the near-term,”the investment bank suggested.

    However, Hugo Suen, an analyst with Sunwah Kingsway, painted a slightly rosier picture for Pou Sheng.

    “After all, this company has the best international sports brands [as its business partners], and the swift action by the board should be able to rescue its reputation in the long term,” Suen said.

    Pou Sheng closed Monday trading at HK$1.61, down 22.22 per cent while Yue Yuen erased some of the earlier losses to settle 6.88 per cent down from the previous close at HK$27.05.

  • Yue Yuen sales rise on retail rollout

    Yue Yuen sales rise on retail rollout

    The world’s largest branded athletic and casual footwear manufacturer and retailer Yue Yuen Industrial says retail and wholesale sales of sportswear in Greater China rose 19.6 per cent in the first nine months of this year, due to an expanding store network.

    Yue Yuen operates more than 6000 retail stores and concessions across Greater China under its own name as well as the international brands it manufactures for.

    Total sportswear sales reached US$1.7 billion compared to US$1.456 billion in the same period last year. Other factors in the growth were the company’s efforts to increase efficiency and a better merchandise selection.

    Sales of athletic shoes were up by 3.4 per cent and sales of casual shoes were down by 5.6 per cent. The total volume of shoes sold increased by just 1.1 per cent to 231.4 million pairs for the period.

    Hong Kong listed Yue Yuen designs and makes shoes for brands including Nike, Crocs, Adidas, Reebok, Asics, New Balance, Puma, Timberland and Rockport as well as operating its own network of retail stores under the YY Sports brand, through subsidiary Pou Shen.

    The increased athletic shoes and sportswear sales helped boost Yue Yuen’s overall revenue by 5.8 per cent to US$6.3 billion and gross profit by 9.1 per cent to $1.422 billion. Total net profit attributable to owners of the company was $285.6 million, up 36.6 per cent year on year, according to figures filed with the stock exchange.

    Pou Shen, which opened 771 new points of sale during the nine months, increased its gross profit by 32.5 per cent to $566.5 million due to management’s strategy to concentrate on the retail business, improved operating efficiency, and better procurement of inventory.

    YY Sport instore wide